Reasons for Telecom Bill Discrepancies

Telecom service providers, their competitors, and business customers all play a role in inaccurate bills. Let us start with the pivotal 1996 Telecommunications Act.

Telecom Service Providers

The Telecommunications Act of 1996 dramatically altered the telecom landscape by deregulating telecommunications. The resulting fierce price competition in long-distance rates, which drove down telecom service providers' revenues, prompted a decline in customer service levels that often leads to inaccurate billing.

Historically, a carrier's customer account manager may have supported a few major business accounts. However, with the pressure to control costs and boost profitability, the same account manager now services more accounts with less time for each one. Turnover and the lack of adequate training may also contribute to declining service levels.

For example, one long-distance provider's sales representative insisted to a client that his firm did not offer toll fraud insurance. He was somewhat embarrassed when shown the details of a toll fraud offering on his firm's public Web site. Telecom account managers must understand their customer's business and telecom usage, as well as their own offerings. Otherwise, service orders may not be correctly executed and billed.

Overly Aggressive Competitors

The Telecommunications Act of 1996 ushered in new competitors eager to aggressively increase their market share in the local and long-distance markets. The terms "slamming" and "cramming" were quickly added to the telecom lexicon as some service providers allegedly engaged in illegal business practices to gain new customers.

Slamming is the illegal practice of switching a company's preferred local or long-distance service provider without explicit authorization. When a company orders telephone lines from the local telephone company, it specifies the preferred long-distance carrier for each line. The preselected long-distance carrier for a telephone line is commonly referred to as a PIC (preferred interexchange carrier). In telecom vernacular, we say that the line has been "PICed" to a particular carrier.

Telephone customers are slammed in a variety of ways. A common method is the use of forged copies of Letters of Authorization to the local telephone company, which "authorize" switching the PIC to an unauthorized provider. In another method, a service provider contacts a customer about new services but does not inform the customer that selecting the new service will also result in changing the preferred long-distance provider or PIC. In some cases, particularly for residential services, truly deceptive practices have been used. For example, "free" raffle tickets at retail malls have tiny print at the bottom that authorizes a switch from one carrier to another. When unsuspecting victims fill out and sign the raffle ticket, they are unknowingly authorizing a carrier change.

Cramming is the illegal practice of adding charges to a business telephone account for products and services that have not been authorized. In one press release by the Federal Communications Commission (FCC), a service provider was fined for placing "unauthorized fees for 'membership' in the 'Friends to Friends' psychic services hotline and 'other' charges on consumers' telephone bills." What the FCC found particularly egregious about these violations was that many customers were billed for these services although they had no contact with the service provider or the psychic services hotline.

PricewaterhouseCoopers has encountered several cases of cramming in its bill audits. While auditing bills for a global professional services firm, there was one office with a telephone line that was billed twice for voicemail — by two different service providers. If a representative from either service provider had called the telephone number prior to cramming the line, he would have found that the line already had voicemail — from an onsite Avaya voicemail system that the firm owned. Another common example of cramming is a charge for "inside wiring," which is, in most cases, an unnecessary line maintenance fee.

Business Customers

One major business issue that corporations face today is how to react to business cycles and rapidly changing economic conditions. Corporations may engage in mergers, acquisitions, and right-sizing activities. Without adequate telecom cost controls, businesses may drive up their total telecom costs, which hurts the IT budget and the earnings before interest, depreciation, taxes, and amortization (EBIDTA).

Reacting to Cyclical Business Activities
Business expansions and contractions involving significant changes to employee headcount directly impact telecommunications costs. Typically, these business activities result in overpayment for unused circuits and inappropriate services.

In an expansionary period, a company providing services to its new employees may incur significant expenditures for installing lines to the employee's desk, purchasing hardware such as additional cards for the PBX, or provisioning additional trunks from the telephone company. Services such as call forwarding may be inappropriately provided to employees who staff inbound contact centers. Employee telephone abuse is frequently attributed to call-forwarding features that allow employees to forward toll-free phone calls from friends and family to the employee's home after business hours.

In an optimal control environment, appropriate controls are implemented to ensure new telecom assets, and services and telephone features are authorized and commensurate with job responsibilities. Replacing antiquated, manual chargeback systems with automated, scalable systems provides an additional level of control. Employees and their cost center managers can monitor their own network, calling card, and long-distance usage, and report fraudulent activity to appropriate personnel.

During economic contraction, when the organization typically reduces headcount, telecom assets such as cell phones, pagers, calling cards, and radios may not be recovered. Also, services may not be disconnected appropriately. Experience shows that ineffective asset management contributes to losses. The exit interviewer may not have objective information on the departing employee's telecom assets (cell phone, pager, calling card, etc.); sometimes, information from Human Resources is not current. The net result is that services may continue to be provided to the terminated employee for months after termination.

Effective controls ensure that any reduction in workforce will trigger a set of actions to identify and recover assets and remove services. Without adequate controls, cost centers could be inaccurately billed for usage and equipment charges; significant business risks are incurred from disgruntled individuals misusing or compromising telecommunications services and systems.

Consolidating Offices after Mergers or Acquisitions

Companies that merge with or acquire another entity typically relocate or consolidate offices. Without appropriate bill review processes, consolidation activities frequently lead to paying for unused services and dangling circuits — circuits that are not terminated at one endpoint — because they have not been removed from the telephone company's billing records.

Although the local telephone company has disconnected the enterprise's circuits, the long-distance carrier can still render usage charges. The enterprise is essentially paying for someone else's long-distance services. This situation occurs when the local telephone company reassigns the circuit to another enterprise. If the circuit has not been removed from the original enterprise's long-distance carrier's database, the long-distance company will continue to bill the original enterprise for all usage charges incurred by the new circuit owner.

Implementing Technology Solutions
The advent of the Internet, intranets, and extranets has placed increased demands on network bandwidth and availability. Enterprises are upgrading voice and data infrastructure to enable Customer Relationship Management (CRM) solutions, E-business, and other strategic initiatives.

Customers expect a prompt response, whether they are purchasing by telephone or the Internet. If Web-enabled transactions slow to a crawl, customers will buy from a competitor's site. CRM technology investments are unsuccessful if the most profitable customers get busy signals from the contact center or encounter an auto-attendant nightmare. The enterprise will most likely lose the sale — and possibly the customer.

Companies competing for mind share with today's sophisticated consumer must continue to improve the quality of the customer's experience with the contact center. Today, the customer's attention span is shorter than ever. Customers have more choices, easier access to information, and higher expectations of service and availability.

In response to these concerns, companies traditionally increase bandwidth without appropriate consideration of costs. That is, they may hurriedly throw excess bandwidth at the problem rather than taking the time to adjust in proportion to actual need. The need for more capacity, more services, and more fault tolerance capabilities must be balanced with the need to control costs. Too much capacity leads to excessive costs. In a recent audit, one enterprise added more than a dozen long-distance T1s as a contingency for Y2K; six months after the millennium change, the excess T1s were still in place.

Adding services without appropriate capacity planning can result in paying for unused circuits and services. Asset management systems that inventory line, circuit, and hardware assets, coupled with real-time monitoring of network and trunk utilization call accounting reports, will help control over- and undertrunking.